Change Is A Powerful Force At Comed

Freedom Sought From Dutyto Supply Region's Electricity

Earlier this month, Commonwealth Edison Co. did something seemingly strange: It published a map showing future competitors the very best places in Illinois to build power plants.

At first take, it might have seemed that the utility's executives had been playing around electricity for too long, frazzling some of their own internal wiring.

But the map was just another signal from the state's largest electric utility that it is in the early stages of a profound transformation, one that will create a company--or companies--with little resemblance to the monopolistic, nuclear behemoth that now casts its shadow over the electricity business in Chicago and northern Illinois.

Commonwealth Edison wants out from under the burden of providing enough electricity to power the region. It wants the freedom to close nuclear power plants, to sell coal-fired plants, to make itself into a whole new kind of power company, maybe even one that doesn't generate power at all.

Exactly what shape the new company will take, though, is unclear to everyone, including John W. Rowe, chairman and chief executive of Unicom Corp., Edison's parent company.

As the electricity business becomes competitive, will Edison still generate electricity or only sell and distribute it?

Will it spin off its power plants into a company that makes electricity, then merge that with another electricity maker to become a national powerhouse?

What are the chances that the company, the largest nuclear utility in the country, will close more of its nuclear plants?

"All of these questions are on the table," Rowe said in an interview. "We genuinely haven't answered them."

And answers could take years. "I want to be decisive, but I don't want to be decisive just for the sake of being decisive," Rowe said.

But some clues are emerging.

Wall Street cheered when Edison shut down its Zion nuclear power station in January, and surely would reward Unicom for shutting down another one or two of its remaining five twin-reactor nukes.

When the company's board hired Rowe in February, it brought in a guy who knows how to pull the plug on nuclear power. While CEO of New England Electric System, he was the driving force in shutting down three of the six plants in which the utility had a minority ownership.

It is inconceivable, though, that Edison would close all its plants. In fact, the utility is clearly committed to protecting three of its plants, while it seems less committed to two others.

Byron and Braidwood, Edison's newest and best-run plants, are likely to be humming well into the future--though exactly who will be running them is open to question.

LaSalle has become one of Edison's most problematic plants. It hasn't run since 1996 and is now on the Nuclear Regulatory Commission's watch list of plants that need the closest scrutiny.

But it is clear that Edison has every intention of rehabilitating LaSalle, the third biggest and third newest of Edison's plants. In the nuclear power business, size and age are everything, determining economic viability.

While the plant has been closed, the company has spent almost $100 million on infrastructure at LaSalle, according to Oliver Kingsley, who runs Edison's nuclear program.

The company is spending less on its two smallest and oldest plants, Dresden and Quad Cities. Both plants have been running since the early 1970s and have been nothing but trouble for the utility.

These are the plants that are on the bubble.

Even as Edison was improving performance at its other plants, federal regulators recently noted that Quad Cities was in decline. And while regulators have seen much improvement at Dresden, the unit has had two "scrams"--in which safety systems automatically shut down the reactor--in the last year, far above industry norms.

In a filing with the Securities and Exchange Commission, the company noted pointedly, if a little awkwardly, that "older plants generally require greater attention and resources to meet regulatory requirements and expectations as well as to maintain operational reliability."

Howard Learner, executive director of the Environmental Law & Policy Center and a savvy Edison watcher, points out another reason that Edison might be better off letting Dresden or Quad Cities go dark.

The book value of each of those plants is low enough to allow the company to take a charge for closing them and still show a profit, permitting it to pay a dividend to shareholders.

"This decision will be driven by the ability to pay dividends as much as it is on engineering," Learner said.

Kingsley, brought in last year to fix Edison's nuclear program, said he believes Dresden and Quad Cities can produce electricity for less than the company is now paying for it on the open market. If that is the case, the plants could survive.

"That's what I intend to pursue, that's why I am here," Kingsley said. "But if the marketplace is less and we have done everything we can, then we will shut them down. We'll let business decisions run this."